Care Home Fees and the Family Home

- and how to safeguard your home by making a Property Protection Trust Will.

Care home fees later in life can be a worry – even though people are living longer, there is a chance that one or even both partners in a family home will require long-term residential care at some point in their lives. Our Partner Alex Kilby explains how you can safeguard your family home.

Most people assume that they will pass on their house to their children or other relatives when they pass away, yet this may not always be the case unless careful arrangements have been made to protect your house from being used to pay care home fees.

Can’t I just transfer my Property to my children now?

Unfortunately, this is not usually a good idea as if any of your children became bankrupt, get divorced or die during your lifetime, that share you transferred to them might end up in the hands of their creditors, their ex-spouse or their executors and the family home could end up being sold.

The local authority also have the power to overturn any such transfer if they feel that it has been done solely to avoid care home fees as they will say it is a “deprivation of assets” – i.e. you have disposed of your assets deliberately to put you in a better position for local authority care funding assessment. There is no time limit as to how far back the local authority can go.

There are also various tax implications when the Property is sold in the future.

What can I do about it?

Most couples own their home in such a way that when the first of them passes away, the home is then owned wholly by the survivor. If the survivor then goes into care,the whole of the property can be taken into account by the local authority, when assessing if care costs are payable. Do you own your home in this way?

However, you can safeguard 50% of the family home by changing the way you own your home, and by placing your share in what is known as a Property Protection Will Trust. This is a special type of Will which includes a provision that when you die your share of the Property is placed into Trust whilst allowing the survivor to continue living in the Property for the rest of their days.   

Let’s take an example of Mr and Mrs Jones. They own their home between them as joint owners, but don’t have much by way of savings. They want to make sure that the family home is not used to pay for care home fees in the future.

If Mr Jones dies first he leaves his half share of the home in a Property Protection Trust, with the remainder of his estate left to his wife.  Mrs Jones has a right to live in the home together with the ability to move house.  If Mrs Jones then required long term care, the local authority could only take into account the half of the home owned by her. The half left to the children by Mr.Jones would be protected from the local authority, and there is nothing they can do to overturn it.

Even if Mr and Mrs Jones’s children are made bankrupt, become divorced or predecease Mrs Jones, her occupation is secured. On Mrs Jones’s death, the Property Protection Trust comes to an end and the half share of the house transferred (or the sale proceeds paid) to the children

Can I still move?

This is no problem, the survivor can till move house and an alternative property can be purchased.

OK, sounds good. How can I get the ball rolling?

Contact our Life Planning team today on 01443 755189 or by email to lifeplanning@devonalds.co.uk and we’ll be happy to help.

Our Will writing solicitors are listed on the UK Help & Advice website and they have an in-depth guide all about "Property Protection Wills" which you can find here: https://helpandadvice.co.uk/property-protection-trust/